Last week, food delivery giant Swiggy filed its draft red herring prospectus (DRHP) with SEBI for an issue of ₹3,750 crore for its IPO, alongside an offer for sale (OFS) of 18.52 crore shares, already making it one of the tech biggest IPOs in history. Now, the shareholders of the firm have approved a proposal to increase the fresh share issuance in its IPO, elevating the size of the issue to ₹5000 crore.
“The approval has been granted by shareholders for the enabling provision to increase the fresh issue component…this means the company can increase fresh capital raise to Rs 5,000 crore if required,” a person familiar with the matter said.
Under the revised IPO structure, Swiggy will now raise approximately ₹11,664 crore, or $1.4 billion, marking an increase from the previously planned $1.2Bn (~₹10,414 crore). The existing shareholders will offload shares worth ₹6,664 crore. If this goes through, then Swiggy’s entry into the public markets will surpass all other major public listings and emerge as one of the largest IPOs in India this year. The updated DRHP revealed that Swiggy intends to deploy the proceeds from the sale of fresh shares towards opening more dark stores to fuel the expansion of its quick-commerce operations in the country.
It seems the increase in size is stemming from the significant buzz that the IPO has created in secondary markets, wherein it is withholding its asking price, even commanding slight premium in black markets. However, investors will tread with caution, considering a majority of the portion is going off in paying existing investors with less than 40% going to company’s own coffers. Additionally, even though Swiggy continues to reduce losses, profitability is not in near-sight.
Swiggy’s offering in the quick commerce space — Instamart — has been emerged as the growth engine that the company will aim to expand upon. Instamart, like its competitors in the sector, focuses on bringing groceries and other essentials to customers within a matter of minutes (usually 10 minutes) – something that is aided by a network of dark stores across the region – they store products in locations that are close to customers, and thus enable faster deliveries. It remains to be seen whether Swiggy’s plans provides Instamart an edge over its competitors like Blinkit and Zepto.
It also comes at a favorable time for the Indian market – so far, around 250 companies have collectively raised over $9 billion through public offerings this year, which is more double the amount raised during the corresponding period in the previous year. This also comes a handful of days after asset management firm Invesco raised the valuation of its stake in Swiggy by 25%. The markup increased the current valuation of the firm to $13.3 billion. The upcoming IPO also comes at an opportune time for Swiggy, which saw its revenue clock an annual growth of 36% to reach ₹11,247 crore for FY24. For the same period, its losses narrowed by 44% to amount to ₹2,350 crore (a decrease from ₹4,179 crore in the previous fiscal year).
